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Author: TMFBigFrog Big red star, 1000 posts Old School Fool Home Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 3179  
Subject: Re: now 'n later Date: 7/6/2007 12:58 PM
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Hi SF Wind,

I guess my real question is that the stock is going to float one way or another (mostly the other since I first started looking at it at $2.60) until big news, why play now rather than wait. Not until the news, but until the decision is closer at hand. Already waiting has saved me from a 20% drop...

There are two key factors at play: price & time.

Price
It's tough to figure out what the right price to pay is for a company. That holds especially true for one such as Acusphere that has no real revenues, a substantial cash burn rate, and essentially one big shot at making it independently. In my case, $2.24 was the price I was willing to pay to make this calculated speculation, so I set my Good 'Til Cancelled limit order there and waited for it to either hit or expire. It hit, so I bought.

As for why I set my price there, it was part financial projection, part probability analysis, and part gut feel based on asking myself what price I'd be willing to pay to own and wait for the outcome of the FDA approval process. I wish I could give you a specific formula to follow, but in truth I can't. The company's long term value looks basically like an either feast or famine type projection, depending on whether or not Imagify gets approved by the US FDA. Your guess is as good as mine as to if that will happen or not.

Time
While it's tough enough to figure out what price I'm willing to pay, it's an order of magnitude tougher to also try to project what time the price will be available. My Crystal Ball is completely worthless (see http://www.fool.com/news/commentary/2004/commentary04102206.htm ).

As a result, I've more or less stopped trying to look for the right time to buy. Instead, I have focused my efforts on finding the right price and learning the patience to both:
1) wait for the right price and
2) wait for the news to be written, the end-state data to be available, and the market to adjust accordingly.


Some time in the future, a current investment in Acusphere is either going to look like a brilliant bit of foresight or a stupid waste of money. The problem is, we don't know for sure which it'll be or precisely when it'll happen. Like I said, I'm not willing to bet the farm on an either-or proposition like this. But at $2.24 a share, for well below 1% of our investments, the potential looked good enough so that it was a calculated speculation I was willing to make.

If you're not at that point with regards to your decision to either invest or not invest in Acusphere, that's perfectly fine, too. Above all else, you need to be able to sleep at night. If your investments are keeping you up with worry, then you either own the wrong company or companies or you have too much invested in at least one company that you might be willing to own as a small part of a better diversified portfolio. You're absolutely right to pause and consider the downside of investing in Acusphere. If that downside risk is more than you're willing to stomach, stay away.

Best regards,
-Chuck
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